Houston has been rated as the #1 city in the country in terms of paycheck worth, meaning your money goes farther here than almost anywhere else. However, cars and trucks are no less expensive in “H-Town,” and it can be difficult to finance a car if your credit isn’t perfect–especially now, in the post-recession era.
We can help. For years, we’ve been building a network of dealers and lenders across the Lonestar State, and we have some of the highest rates of approval you’re likely to find. We put you in touch with a financing professional in Houston whose mission it is to get you approved for the car you want. Go here to apply online.
Houston Car Loans for Bad Credit
Most of the time, lenders pull your FICO Auto Industry Option. This score draws on your previous experience with auto loans or leases, and it’s not accessible to consumers. So, your bad credit may not be such an issue as long as you can demonstrate a responsible use of past auto-related credit. A lot of people resort to one of the buy here pay here car dealers in Houston, on account of a bankruptcy or other issues of this nature, but this isn’t usually the case. The good news is, we are experts in serving consumers all across the credit spectrum, getting them approved for the loans they need.
It’s true: a car loan, if paid as agreed, can increase your credit score and demonstrate to lenders that you have learned from your previous troubles. As a means to avoid missed payments, consider having your car payment taken right from your checking account.
Buy Here Pay Here Dealerships in Houston, TX
Maybe you’ve considered financing a car through a BHPH dealer because of bad credit? Ordinarily, there are more attractive alternatives. These dealers will finance virtually anyone, no matter their credit, but there are disadvantages. In most cases, preowned cars and trucks are the only thing you can buy, and dealers may expect you to have a GPS tracking system mounted in your vehicle. The numbers of vehicles being repossessed are astronomical, as are the interest rates. There’s a good reason that these dealerships don’t have a very good reputation. We want to connect you with a reputable dealer who can put you in the driver’s seat, even if your credit is terrible.
Interest Rate: The Key to Success
Your interest rate is dependent upon all kinds of factors, several of which include your consumer credit rating, where you live, and the type of vehicle (new or used). As one example of how much bad credit can cost you, check out this table. The following table depicts a similar auto loan at 3.50% and 10.00% APR, respectively:
|Strong Credit||Bad Credit|
|Term||60 months||60 months|
As you can see, a simple difference of 6.5 percentage points has an enormous impact on the overall cost of the loan. For this reason, it is important to minimize your interest rate however possible.
- Make sure there are no errors on your credit report. If you find any, dispute them.
- Pay down any outstanding debt you can, such as credit card balances, in order to reduce your debt-to-income ratio (DTI).
- Provide a down payment either in cash or trade. This reduces your loan-to-value ratio (LTV), thereby reducing your rate of interest.
- “Shop” your loan among multiple lenders, in order to compare rates. As long as you do this within a relatively short period, you will not be overly penalized in terms of your credit score.
It’s difficult to determine your interest rate without having more details. Why not submit your application and see what rates a local dealer can provide.
Used Car Loans in Houston: The Right Choice?
Pre-owned cars, would you believe, have several advantages over brand new ones. People have been known to discount preowned vehicles for having more costly interest rates, but remember that they cost less up front and over time. If you are worried about repairs and maintenance, make sure you purchase a 1-2 year old vehicle with exceptional dependability. In order to help you decide whether a new or used car fits your budget, we have published this helpful table. The figures depict the same vehicle. The first purchased new, the second purchased two years’ used for 50% of the original price. The down payment for the new vehicle is 20%, while it’s only 10% for the used one.
|New Car||Used Car|
|Duration||5 years||4 years|
Houston Income and Finances
- Yearly Income: $22,655
- Income Per Month: $1,888
- Typical Car Payment: $208
- Suggested Car Payment: $151 (8% of monthly income)
Vehicle Budgeting for Houston Residents
Set aside 8% of your monthly income, that’s it, for your car loan. For those who live in in Houston and, like the average resident, make $22,655 per year, this is $151. Check out this table depicting what car you can afford with a payment per month of $151, 20% down payment, and 5-year term.
|Great Credit||Fair Credit||Subprime Credit|